China-India Relations: Changed and Unchanged

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In recent years, China-India relations have entered a new phase along with increasingly frequent high-level mutual visits. Bilateral relations have acquired some new features while maintaining a steady improvement.

Heartwarming High-level InteractionsIn terms of political ties, China and India witnessed frequent high-level mutual visits and meetings in recent years. From 2003 to 2012, Chinese top leaders met then Indian Prime Minister Manmohan Singh 26 times on various occasions. Such frequent meetings are rare between big powers. In the past couple of years, China and India continued high-level interactions at a very high frequency. So far, Chinese and Indian top leaders have met nearly 10 times on either bilateral or multilateral occasions. Both countries pay great importance to high-level communication. In fact, high-level “navigation” has been one of the most remarkable features of Sino-Indian relations for a long time. Despite the development competition, strategic doubts, territorial disputes, historical burdens, and lack of mutual understanding between the two countries, China-India relations have maintained a steady improvement since the normalization of their diplomatic relationship in 1988. This is largely attributed to the fact that top leaders of the two countries are “helmsmen” steering the ship of bilateral relations in the right direction. Every high-level visit could push their relationship to a higher level. Since 2014, high-level interactions between the two countries have been more heartwarming. The close personal relationship between Chinese and Indian leaders is an important factor behind their frequent meetings on multilateral occasions. In September 2014, President Xi Jinping visited Prime Minister Modi’s home state of Gujarat and sent his greetings on Modi’s birthday. In May 2015, Modi visited Xi’an, the hometown of President Xi and a city of historical and cultural significance in Shaanxi Province. Not long ago, the Indian prime minister conveyed his good wishes on Xi’s birthday via his Twitter account. Their personal interactions showed their Eastern-style sentiments. To a large extent, international relations depend on interpersonal interactions between state leaders as well as ordinary people. Such interactions are important, especially those between leaders.

Bright Prospect of Economic and Trade CooperationSince President Xi called for “building closer partnership” during his visit to India in September 2014, the two countries have seen increasingly close and extensive economic cooperation. Although the two countries failed to realize the goal of enabling bilateral trade to exceed US$100 billion by 2015, their economic relations have moved onto a “fast lane.”The Indian side is dissatisfied at its trade structure with China: The majority of India’s exports to China are raw materials, and in some years, iron ore accounts for more than 60 percent of Indian exports to China. As China is speeding up its economic restructuring and upgrade, especially structural reform in the supply side, the need for raw material has dropped sharply. Meanwhile, with the development and revival of its infrastructure and manufacturing sectors, India’s demand for Chinese products with high added value such as machinery and electric equipment has surged. As a result, this worsens the trade imbalance between the two countries. However, such a trade imbalance, which is still in development, will facilitate India’s economic growth to large extent in general. Compared to their Western counterparts, Chinese mechanical products such as power-generating equipment and mechanical tools are more competitive due to their good quality and cheaper prices. A survey report released by the world’s leading consulting firm Ernst & Young on October 11, 2015, shows that India was considered the most attractive investment destination around the globe in the preceding three years. In the past couple of years, economic cooperation between China and India has expanded from trade to a plethora of areas including investment, infrastructure, environmental protection, high technology, clean energy, and sustainable urbanization. It is noteworthy that the Indian government’s restrictions on Chinese enterprises’ entry into the Indian market have been evidently loosened. In November 2015, the Modi administration surprisingly began issuing fast security permits for Chinese enterprises that intended to invest in India. In 2015 alone, India provided security permits for investment projects by some 20 Chinese companies including Huawei (which previously received much obstruction from India’s security authorities). All of these indicate that the government of India values the role of Chinese capital in India’s industrialization. In a speech he made before leaving office as Chinese ambassador to India in April 2016, Le Yucheng said that Chinese investments are witnessing an explosive growth in India. In New Delhi alone, China Chamber of Commerce in India has more than 300 member enterprises. To date, Chinese investment in India has reached nearly US$4 billion. In 2015 alone, China signed agreements to invest US$40 billion in India. Similarly, Indian private companies are playing an increasingly important role in promoting China-India economic and trade relations. For instance, Tata has extended its reach to China – not only in traditional sectors like the steel and automobile industries, but also in non-traditional sectors such as IT, services, and smart city – and earned tremendous returns by investing in China. In 2014, Tata sold US$13.6 billion of products in the Chinese market, accounting for nearly nine percent of its global sales. China has become the Indian company’s largest market in Asia. In fact, with a combined population of 2.6 billion, China and India are capable of serving as important global testing grounds in promoting new business modes, product standards and technological innovation, and incubating industrial giants.

India’s Rising Security Worries over ChinaIn the past two years, military interactions and security dialogues between China and India increased obviously although the two sides once suspended their military exchange due to the matter of “stapled visas” in 2010. However, compared to fast-growing economic cooperation and frequent high-level mutual visits, interactions in the area of security, especially military affairs, remain quite insufficient. The two countries need to do more to build mutual trust in the security sector. It is noteworthy that since Modi took office, India’s security worries over China have constantly increased. This is evidenced by the fact that India was no longer reluctant to seek security collaboration with the United States, Japan, and the Association of Southeast Asian Nations (ASEAN). Meanwhile, concern over India’s security cooperation with any third party has also risen in China. First of all, India continues deepening its security cooperation and strategic coordination with the United States. Early in June 2016, the two countries finalized a 10-year Logistics Supply Agreement during Modi’s visit to the United States, as well as a cooperative agreement on building six civil nuclear reactors in India. All of these indicate that India and the United States have forged a quasi-alliance relationship. Second, India and Japan have launched defense cooperation process. Japan is the only country building defense and foreign minsters’ meeting mechanisms with India. India already expressed its intention to buy Japan’s Soryuclass submarines. Perhaps the deal will enable Japan to export large military equipment for the first time since the Abe administration passed the Three Principles on Transfer of Defense Equipment in April 2014, which actually annulled the Three Principles on Arms Export that Japan had implemented for decades. Third, India, Japan and the United States have strengthened their trilateral security interactions. Earlier this year, the three countries carried out the Malabar naval drill in the Philippine Sea. This was the first time for the annual military exercises to be held beyond the Indian Ocean. All of these indicate that India has begun to positively respond to enticement by the United States, Japan, and some ASEAN member countries in the realm of defense cooperation. Finally, India has publicly intervened in the South China Sea issue. Although India already began drilling oil in the South China Sea (which is called “East Sea” in Vietnam) in 1988, the fact that India under the Modi administration frequently voiced its views on the South China Sea issue still evoked concerns in China. India is keen on security cooperation with those countries because, on the one hand, it intends to pin down China’s efforts in seeking security cooperation in South Asia and the Indian Ocean; and, on the other hand, it looks to accelerate its own rise based on technological, financial, and political support from those countries. However, we must realize that the security cooperation that India carried out with countries which have strategic doubts about China’s rise usually has little pragmatic content and aims to earn some benefits. It has become a basic consensus among Indian rulers to maintain the overall stability of Sino-Indian relations. The Modi administration is very pragmatic and attaches great importance to Sino-Indian relations. Thus, it never fully supports the policies of the United States and Japan on the South China Sea issue. Though cooperating with some countries, which are severely lacking security and political mutual trust in their relationship with China, the Modi administration pays great attention to China’s concerns since it is unwilling to sacrifice steady development of China-India relations. The most obvious evidence is that India publicly refused the invitation by Harry B. Harris Jr., commander of the U.S. Pacific Command, to “jointly patrol the South China Sea,” in March 2016. During his visit to the United States in June 2016, Modi never mentioned the South China Sea issue in his public speeches. Soon after the U.S. defense secretary visited India in April 2016, the Indian defense minister paid a visit to China. Such an arrangement facilitated New Delhi to eliminate China’s worries about India signing an alliance agreement with the United States. What is more noteworthy, the Joint Communiqué of the 14th Meeting of the Foreign Ministers of Russia, India and China, published in April 2016, states that “all related disputes should be addressed through negotiations and agreements between the parties concerned.” Doubtless, this took into account China’s stance to exclude the United States and Japan in the South China Sea dispute.

Great Potential of People-to-people CommunicationDespite its steady growth in the last two years, people-to-people exchange between China and India remains negligible, given the huge combined population and rich cultural resources of the two countries. It is a debatable fact that public opinion has played a negative role when it comes to the stability and development of their bilateral relations, rather than serving as a propelling and safeguarding force. For a long time, due to lack of mutual understanding and communication and negative reporting by the media on each other’s country, Chinese and Indians hold negative perceptions of each other. It is easy for the public to be misled by the mass media. Indian media habitually review China and Sino-Indian relations based on Western reporting and from Western perspectives. Some Western countries are biased and prejudiced against China, and sensationalize the “China threat” theory. This resulted in most Indians holding a negative attitude toward China. Meanwhile, Chinese media are inclined to report bad news about India, causing many Chinese to hold prejudices against India. Fortunately, people-to-people exchange thrived in the past couple of years thanks to the effort of the governments of the two countries. China opened the Nathu La Pass for Indian pilgrims traveling to Tibet, and India began providing e-visa for Chinese tourists, which are considered two milestone events in the history of Sino-Indian relations. In 2015, mutual visits between the two countries exceeded a million for the first time, accounting for half of the mutual visits between China and South Asian countries. Mutual visits between China and India grew by 25 percent in the first quarter of 2016. Of course, personal exchanges between the two countries remain limited. Starting from 2014, more than 100 million Chinese travel abroad each year, of which only one percent goes to India. Despite the fact that China and India together have a population of 2.6 billion, mutual visits between the two countries only make up 0.06 percent of their combined population. However, there is a pleasant change: More and more Chinese people are optimistic about India’s future development. It is predictable that with the improvement of India’s infrastructure and the growth of middle-class population in the two countries – as well as the constant enhancement of mutual trust in political and security sectors and interconnectivity – people-to-people exchange between China and India will increase, thus changing the landscape of Sino-Indian relations. In a nutshell, India under the Modi administration now faces the best-ever strategic conditions. Although India has intensified its suspicion of China in the security area, the Modi administration, which prioritizes economic development and people’s livelihood and would seek re-election in 2019, will continue to focus on building a “closer development partnership” with China. Therefore, it is certain that New Delhi will avoid conflict and confrontation with China in the time of Modi and even for a long time thereafter. New Delhi’s dilemma lies in how to choose between cooperation and competition in its policies toward China. The author is Director of the Institute of South and Southeast Asian and Oceanian Studies at the China Institutes of Contemporary International Relations.